Gulf down as hopes fade for eurozone fix; Saudi markets upbeat

Published October 19th, 2011 - 07:55 GMT
UAE, Qatar and Oman's markets are down as with a return to uncertainty with regards to euro debt crisis
UAE, Qatar and Oman's markets are down as with a return to uncertainty with regards to euro debt crisis

Most regional markets ended lower Tuesday after comments from Germany’s finance minister dashed hopes of a quick fix to the eurozone debt crisis, while attractive valuations in Saudi Arabians petrochemicals helped lift the bourse.

In the UAE, Abu Dhabi’s benchmark slumped to a fresh 30-month low, dropping 0.3 percent. “We’ve been losing ground every day on thin trade and international markets haven’t been helping, with a return to uncertainty with regards to euro debt crisis,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.

Aldar Properties and Sorouh Real Estate, fell to new all-time lows, dropping 2 and 2.2 percent respectively. Aldar is down more than 90 percent from a 2008 peak. “The market is looking at the real estate sector in a negative way due to the fact we’re still in a conservative investment mode,” said Shurrab. “The only catalyst is the Q3 numbers – if the numbers come in at least in-line or above expectations.” Dubai’s index shed 0.6 percent to its lowest close since March 3.

Emaar Properties slipped 0.4 percent and Dubai Financial Market declined 2.8 percent. Builder Arabtec dropped 2.3 percent. Traders say retail investors are dominant, with institutions absent from the UAE’s markets, although attractive valuations could draw in buyers.

In Qatar, the index ended 0.8 percent lower, taking little comfort from estimate-beating earnings. Qatar Gas Transport Co. (Nakilat) slipped 0.5 percent despite reporting a 41.6 percent jump in third-quarter profit Tuesday.

Commercial Bank of Qatar dropped 2.7 percent, the main drag on the index. Industries Qatar and Doha Bank fell 1.1 and 2.1 percent respectively. Elsewhere, Egypt’s index slipped 0.8 percent as bluechips dragged it lower. Orascom Construction Industries dropped 1.7 percent, Orascom Telecom 0.9 percent and Commercial International Bank 0.2 percent.

In Saudi Arabia, Saudi Basic Industries Corp’s third-quarter earnings went largely unnoticed, despite it posting a second quarter or record profits. “Earnings were led by exponential profitability growth in the fertilizer segment in tandem with lower financial costs for the quarter suggesting expectations of a slowdown in petrochemicals did not materialize,” Mohammad Faisal Potrik, research analyst at Riyad Capital said in a note.

Shares in SABIC rose 0.5 percent after posting a 54 percent jump in quarterly net profit of 8.2 billion riyals ($2.2 billion). Most petrochemical stocks rose in late-buying with valuations bringing back buyers. The benchmark gained 0.3 percent, trimming its 2011 losses to 7.1 percent.

“The PE ratio on SABIC and many of the petrochemical stocks is at an excellent level,” said Youssef Kassantini, a Saudi-based financial analyst. “The market saw the value and bought back the market.” Jarir Marketing jumped 9.9 percent after the company’s board of directors approved a cash dividend distribution of 136 million riyals – 3.4 riyals per share – for the third quarter, according to a bourse statement. Meanwhile, Oman’s index dropped on earnings that disappointed investors and the index fell 0.4 percent.

Bank Dhofar shed 2.3 percent after nine-month net profit declined 77.4 percent to 5.7 million Omani rials ($14.8 million), it said in a bourse statement. “Pressure today came on particular counters from foreign and regional – Oman cables and Bank Dhofar announced disappointing results,” said Adel Nasr, United Securities brokerage manager.

Oman Cables dropped 2.7 percent after its nine-month profit after tax fell to 4.3 million rials ($11.2 million) compared to 5.9 million rials ($15.3 million) in the same period of 2010, according to a bourse statement.

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